Over time, consumer/merchant product purchase transactions have evolved from early barter-type transactions to the three forms of transactions that predominate in the modern economy.
First are face-to-face transactions (for example, involving the customer and a retail store, street vendor, or the like) where payment is made by cash, bank check or credit card. While these face-to-face transactions will always be a part of the economy, they are generally limited to those products that are readily available for exchange at the site of the transaction.
Secondly are conventional “mail order” purchases typically made by telephone calls to operators representing the mail order company. These purchases are usually made through catalog services, but may be through a retail store or, in a TV marketing context, through a vendor that has advertised on television. Payment for these types of purchases are usually by bank check or credit card, with credit card payment being preferred to avoid delays occasioned by mailing the customer's check to the merchant and “clearing” of the check through the banking system. Deliveries of mail order purchases are usually by common carrier, such as United Parcel Service, Federal Express, or the like. While mail order services greatly enhance customer options and provide a convenience, the cost of order processing may exceed 20% of sales due in large part to the high cost of the necessary telephone operators. Additionally, in times of low unemployment and with the expected changing demographics of the work force, it is likely to be exceedingly difficult to recruit and retain workers in sufficient numbers at reasonable wages and with sufficient skills to maintain the current cost structures of retail mail order processing.
The third form of consumer/merchant transactions in the modern economy is purchasing through computers that are interconnected through communication links, for example, orders of products over the Internet. Internet purchases are almost exclusively paid for by credit cards. Drawbacks to the current Internet purchasing model include the occasional difficulties in logging on as well as the unfamiliar and cumbersome process necessary to page through an electronic catalog, often resulting in enough frustration that potential purchasers simply do not attempt the effort. Vast numbers of “computer savvy” consumers simply refuse to use Internet purchasing systems for these reasons. Additionally, there is the problem of sensitive information, primarily credit card numbers, being routed through the nodes of computer systems that are located throughout the world. Large numbers of computer savvy customers refuse to use the Internet purchasing systems for security reasons alone. As another consideration, the entire Internet purchasing model is brought into question by the well-documented financial losses on operations suffered by this segment of the economy. Published reports indicate that the 241 largest retail Internet merchants in the United States are currently losing approximately seven billion dollars per year on net sales of 20 billion dollars per year—bringing into question the viability of the Internet based retail selling business model. Lastly, vast numbers of people, currently a substantial majority of consumers in the United States, simply do not have home-based access to the Internet or do not have the computer skills or confidence to engage in Internet purchase transactions. While optimistic projections see this problem declining over time, there clearly is a ceiling on the percentage of the population who will use this model even five or ten years in the future. As evidence of the reluctance of a solid core of citizens to use Internet ordering either now or in the future is the fact that only fifteen to twenty percent of video cassette recorder (VCR) purchasers learn to program their VCR's to record programming for time shifting purposes—or even master the steps necessary to set the VCR's clock.
Another issue not addressed by promoters of the Internet model for consumer purchase transactions is the inability of relatively small vendors to offer products independently without the significant overhead attributed to the so-called “back office operations” associated with order processing. An order processing system that would permit small vendors to economically and efficiently process orders would open up a limitless number of business opportunities and further enhance choice and price competition to the benefit of consumers and the economy as a whole.
Telephone technology appears to have been largely overlooked in the current rush to Internet based consumer product purchase transactions. Telephone access is essentially universal in developed countries throughout the world, with compatible protocols and systems interconnecting the entire globe. Telephones are easy to use and become more so every day. Virtually everyone is comfortable with telephone communications and appreciates the convenience they afford. The versatility and options offered by telephones are ever expanding, while the cost of calls is dropping dramatically. Long distance toll charges in the year 2010, including international calls, are likely to drop to on the order of one to three cents per minute, with many calls close to being free. Cellular phones are becoming so small that they may be carried in even the smallest purse, and with further miniaturization, cellular phones will be carried with the ease of a credit card. Lastly, and importantly, the phone system offers a level of security to the information transmitted, whether voice or data, that is sufficient to meet the requirements of the most security sensitive consumers and merchants.
While the above-mentioned forms of customer/merchant purchase transactions presently support a vibrant and ever expanding consumer-based economy, a new system for initiating and completing purchase transactions that overcomes the above drawbacks is desirable to facilitate product ordering by consumers and to further drive the economy in the new millennium. A new system utilizing time-tested and ever improving telephone technology offers exceptional promise, with the prospect that the system will also utilize promising emerging technologies.